Custom, Excise & Service Tax Tribunal
The Commissioner Of Customs & Central ... vs M/S. Ultratech Cements Ltd on 8 October, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BANGALORE SOUTH ZONAL BENCH COURT - I Appeal No: E/2574 & 2575/2010 (Arising out of (i) Order-in-Appeal No:69/2010 (T) CE dated 27.8.2010 & (ii) Order-in-Appeal No.70/2010 (T) CE dated 27.8.2010 both passed by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Guntur.) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes The Commissioner of Customs & Central Excise Tirupathi Commissionerate Tirupathi. Appellant Versus M/s. Ultratech Cements Ltd. Respondent
Appearance Ms. Sabrina Cano, Superintendent (AR) for the appellant/Revenue.
Shri Raghavendra, Advocate for the respondent.
CORAM SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL) Date of Hearing: 08.10.2012 Date of decision: 08.10.2012 FINAL ORDER No._______________________2012 No.E/257/2010 In appeal No.E/2574/2010 filed by the department, the short question arising for consideration is whether the respondent is liable to pay interest in terms of Rule 14 of the CENVAT Credit Rules, 2004 on a total amount of excess credit (Rs.6,55,789) taken during the period September - December, 2004 and reversed on 31.10.2005, for the period from date of taking of credit to the date of its reversal. The lower appellate authority, pursuant to the Tribunals remand order viz., final order No.576/2010 dated 8.3.2010, held that the respondent had no interest liability as per the Honble Punjab and Haryana High Courts decision in the case of Ind-Swift Laboratories Ltd. vs. UOI: 2009 (240) E.L.T. 328 (P & H). It is submitted by the learned Superintendent (AR) that the Honble High Courts judgment was reversed by the Honble Supreme Court in UOI vs. Ind-Swift Laboratories Ltd.: 2011 (265) E.L.T. 3 (S.C.) and therefore the impugned order has to be set aside.
2. Per contra, it is submitted by the learned counsel for the respondent that the aforesaid remand order of the Tribunal was accepted by the department and hence the decision rendered by the Commissioner (Appeals) in terms of the remand order cannot be challenged by them. It is further pointed out that Rule 14 ibid was subsequently amended so as to create interest liability in respect of CENVAT credit taken and utilized wrongly. This amendment was made by way of substitution of the word and for the word or in the text of Rule 14. It is argued that this amendment discloses the legislative intent to levy interest only on an amount of CENVAT credit which was taken and utilized wrongly and not to create interest liability in respect of any CENVAT credit wrongly taken but never utilized. It is argued that the amendment should therefore be given retrospective effect. In other words, according to the learned counsel, the Honble Supreme Courts judgment in Ind-Swift Laboratories case cannot hold good in the light of the above amendment of Rule 14.
3. In her rejoinder, the learned Superintendent (AR) submits that, in the case of Ind-Swift Laboratories case, the Honble Supreme Court clearly distinguished the meaning of or from that of and. It is argued that, if the view expressed by the learned counsel is accepted, it will have the effect of understanding both the words in identical sense, which is not the purport of the interpretation given by the apex court. It is further submitted that there is no basis for the argument that the above amendment to Rule 14 has retrospective effect. As the period of dispute in the present case is prior to 1.4.2012 (date of amendment), the amendment has no impact on the present case and consequently the issue has to be addressed in the light of the Honble Supreme Courts decision in Ind-Swift Laboratories case.
4. After giving careful consideration to the submissions, I am of the view that the question whether the respondent should pay interest on any amount of CENVAT credit wrongly taken during September-December, 2004 and rightly reversed on 31.10.2005 has to be examined in terms of Rule 14 as it stood during the material period. Rule 14 as it stood during September, 2004 - October, 2005 was considered by the Honble Supreme Court in the case of Ind-Swift Laboratories (supra) and it was held as follows:
17.?We have very carefully read the impugned judgment and order of the High Court. The High Court proceeded by reading it down to mean that where CENVAT credit has been taken and utilized wrongly, interest should be payable from the date the CENVAT credit has been utilized wrongly for according to the High Court interest cannot be claimed simply for the reason that the CENVAT credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty. Therefore, High Court on a conjoint reading of Section 11AB of the Act and Rules 3 & 4 of the Credit Rules proceeded to hold that interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is wrongly utilized. In our considered opinion, the High Court misread and misinterpreted the aforesaid Rule 14 and wrongly read it down without properly appreciating the scope and limitation thereof. A statutory provision is generally read down in order to save the said provision from being declared unconstitutional or illegal. Rule 14 specifically provides that where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. The issue is as to whether the aforesaid word OR appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court. If the aforesaid provision is read as a whole we find no reason to read the word OR in between the expressions taken or utilized wrongly or has been erroneously refunded as the word AND. On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest.
18.?We do not feel that any other harmonious construction is required to be given to the aforesaid expression/provision which is clear and unambiguous as it exists all by itself. So far as Section 11AB is concerned, the same becomes relevant and applicable for the purpose of making recovery of the amount due and payable. Therefore, the High Court erroneously held that interest cannot be claimed from the date of wrong availment of CENVAT credit and that it should only be payable from the date when CENVAT credit is wrongly utilized. Besides, the rule of reading down is in itself a rule of harmonious construction in a different name. It is generally utilized to straighten the crudities or ironing out the creases to make a statute workable. This Court has repeatedly laid down that in the garb of reading down a provision it is not open to read words and expressions not found in the provision/statute and thus venture into a kind of judicial legislation. It is also held by this Court that the Rule of reading down is to be used for the limited purpose of making a particular provision workable and to bring it in harmony with other provisions of the statute. In this connection we may appropriately refer to the decision of this Court in Calcutta Gujarati Education Society and Another v. Calcutta Municipal Corporation and Others reported in (2003) 10 SCC 533 in which reference was made at Para 35 to the following observations of this Court in the case of B.R. Enterprises v. State of U.P. and Others reported in (1999) 9 SCC 700: -
81.?. It is also well settled that first attempt should be made by the courts to uphold the charged provision and not to invalidate it merely because one of the possible interpretations leads to such a result, howsoever attractive it may be. Thus, where there are two possible interpretations, one invalidating the law and the other upholding, the latter should be adopted. For this, the courts have been endeavouring, sometimes to give restrictive or expansive meaning keeping in view the nature of legislation, maybe beneficial, penal or fiscal etc. Cumulatively it is to subserve the object of the legislation. Old golden rule is of respecting the wisdom of legislature that they are aware of the law and would never have intended for an invalid legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down. Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear to be in defiance of the Constitution. These interpretations spring out because of concern of the courts to salvage a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the field of interpretation. This equally helps to save an Act but also the cause of attack on the Act. Here the courts have to play a cautious role of weeding out the wild from the crop, of course, without infringing the Constitution. For doing this, the courts have taken help from the preamble, Objects, the scheme of the Act, its historical background, the purpose for enacting such a provision, the mischief, if any which existed, which is sought to be eliminated...This principle of reading down, however, will not be available where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it confers arbitrary, uncanalised or unbridled power. (emphasis supplied)
19.?A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. reported in (1961) 2 SCR 189 wherein this Court at Para 10 has observed as follows : -
10.?. In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency.
20.?Therefore, the attempt of the High Court to read down the provision by way of substituting the word OR by an AND so as to give relief to the assessee is found to be erroneous. In that regard the submission of the counsel for the appellant is well-founded that once the said credit is taken the beneficiary is at liberty to utilize the same, immediately thereafter, subject to the Credit rules. 4.1 In the above view of the matter, the apex court set aside the Punjab and Haryana High Courts judgment. The impugned order was passed in view of the High Courts judgment and hence requires to be set aside. As per the decision of the Honble Supreme Court, the respondent is liable to pay interest on the amount of CENVAT credit for the period from the date of its irregular availment to the date of its reversal, this period being covered by Rule 14 pre-amendment.
5. The impugned order is set aside and this appeal is allowed.
E/2575/2010
6. In this appeal No. E/2575/2010 filed by the department, the question which arises for consideration is whether the respondent was entitled to take CENVAT credit on certain invoices issued by a registered depot of the manufacturer of inputs.
7. After hearing both sides, I find that it is not in dispute that the depot was registered with the department for issuing cenvatable invoices. It is also not in dispute that the inputs were used in, or in relation to, manufacture of final products in the respondents factory. The respondent took CENVAT credit of the duty indicated in the depot invoices. On these facts, the availment of the CENVAT credit by the respondent cannot be questioned. The case of the appellant is that there is no evidence of the amounts of duty shown in the depot invoices having been paid by the manufacturer. If the department had doubts regarding the amounts of duty paid by the manufacturer, appropriate proceedings should have been taken at their end. Any short-payment of duty by the manufacturer could have been taken care of through such proceedings. At the respondents end, CENVAT credit was taken on valid documents and the inputs in respect of which such credit was taken were duly used in, or in relation to, the manufacture of final products. Therefore there is no reason to deny the credit to the respondent.
8. In the result, the impugned order is sustained and this appeal is dismissed.
(Pronounced and dictated in open Court) (P. G. CHACKO) Member (J) rv ??
??
??
??
8